Does Your Phased Strata Development Have Common Facilities?
If a developer builds common facilities early in a phased development, the Strata Property Act protects early purchasers with special requirements. The Strata Property Act defines a common facility as,
… [a] major facility in a phased strata plan, including a laundry room,
playground, swimming pool, recreation centre, clubhouse or tennis court,
if the facility is available for the use of the owners.
Where a developer builds common facilities before the last phase is filed, section 227 of the Strata Property Act requires the developer to contribute to the cost of maintaining and repairing those facilities until the final phase is deposited at the Land Title Office. The Act divides the cost of maintaining and repairing common facilities between owners who purchase early in the development and the developer, who effectively serves as a proxy for those who will become owners in the future, after later phases are built. Here is the formula for the developer’s contribution:
In Strata Plan NES 97 v. Timberline Developments Ltd., the developer built the project in 11 phases. There were 175 strata lots in six buildings (apparently called, “lodges”). There were also six hot tubs, each associated with a particular lodge. Three of the lodges each contained a common laundry room. Four lodges had elevators. The owners paid all the expenses for the hot tubs, laundry rooms and elevators.
After the developer filed the last phase, the strata corporation sued the developer. Relying on section 227 of the Strata Property Act, the strata corporation claimed reimbursement for the developer’s past share of expenses for the hot tub, laundry room and elevator facilities.
The court found that the hot tubs were common facilities within the meaning of the Strata Property Act. First, the hot tubs were major facilities in the sense that they were important or significant to the facility. Next, the hot tubs were optional and they played a significant part in enhancing the overall quality of the development. Finally, the hot tubs were available for the use of all the owners. While an owner might tend to use the hot tub associated with that owner’s building, nothing prevented the owner from using any other hot tub in the complex. For the same reasons, the court found that the laundry rooms were common facilities.
By contrast, the elevators were not common facilities because they were not optional. Instead, the elevators were a standard means of access, similar to a hallway or stairs.
The court held the developer liable to contribute its share of past hot-tub expenses. Although the laundry rooms were also common facilities, the strata corporation failed to prove that the expenses claimed were clearly attributable to those facilities.
If you own a strata lot in a phased development where the last phase is not yet filed, it is a good idea to ask if any common facilities have already been built, and if so, whether the developer pays a share of their annual upkeep, as required by the Strata Property Act.
For more information about phased developments, see Chapter 31 in The Condominium Manual. In the online version of Chapter 31, the reader will find more detailed information about the decision in Timberline Developments and its consequences for phased strata owners.
The Following Sections of TCM Online Have Been Updated